The alveolar epithelium is comprised of two morphologically distinct differentiated epithelial cells, type I (TI) and type II (TII) cells, both of which are thought to be critical for normal lung function. Although the establishment and maintenance of a normal alveolar epithelium is essential for mammalian life, we have a limited understanding of the important processes that regulate these events. The broad objectives of the research are to understand how alveolar epithelial development and maintenance are regulated. Within this context, the overall goal of this project are to elucidate the cell lineages of TI and TII cells and the cellular mechanisms responsible for the differentiation of both cell types during late development. Most studies of lung development have focused on early developmental stages, in particular the process of branching morphogenesis. Little is understood about the cellular progenitors of mature TI and TII cells or about how differentiation of each of these cell types occurs. In the adult lung, TII cells have the capacity to repair injured alveoli, acquiring morphologic characteristics of the TI cell phenotype. From experiments performed almost 30 years ago using techniques of autoradiography and electron microscopy, it was concluded that a similar process occurred in the developing lung, that TI cells were derived from TII cells. Based on more recent published data and new data presented in the Progress Report and Preliminary Data section, it appears that this pathway may not be the sole or even major mechanism by which TI cells are formed. On the basis of these recent data, we have generated two working hypotheses: 1) during late fetal development, progenitor cells of the alveolar epithelium co-express markers of differentiated TI and TII cells and progressively restrict expression of these markers during differentiation; and 2) type I cells can arise from cells other than or in addition to mature TII cells.